Tuesday, February 01, 2005

Crisis!

CBO projects that under current law Social Security outlays will first exceed revenues from payroll taxes and taxation of benefits in 2020 and that the program will exhaust the trust funds in 2052. After the trust funds are exhausted, Social Security spending cannot exceed annual revenues. As a consequence, because dedicated revenues are projected to equal 78 percent of scheduled outlays in 2053, CBO finds that the benefits paid will be 22 percent lower than the scheduled benefits.

The CBO moved the date outlays exceed revenues back 2 years, but left the trust fund exhaustion date the same. What should you expect in benefits?

Median benefits

Decade of birth

Promised annual benefits

Projected annual benefits

1970

$17,200

$17,200

1980

$19,500

$18,800

1990

$22,100

$16,900

2000

$25,000

$18,500

Promised and projected benefits are given in 2004 dollars.

There's a modest shortfall sometime in the 2040s, easily correctable with modest economic growth or by raising the ceiling on FICA taxes.